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Energy Efficiency Is a Solid Foundation for GHG Reductions by Large Companies

January 20, 2017
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By Neil Kolwey

Nearly half of Fortune 500 companies now have targets to reduce greenhouse gas emissions, buy renewable energy, and/or increase energy efficiency. The companies want to be socially responsible and enhance their green business image, but pursuing clean energy goals also benefits their bottom lines, especially when their efforts emphasize energy efficiency. These enterprises will continue to play an important role in the next four years towards helping the U.S. achieve its Paris climate commitments, especially if there is little or no support for clean energy from the federal government.

In a voluntary program called “RE 100,” more than 80 large companies have set goals to buy 100 percent renewable energy by a certain date, such as 2020 or 2025. They include Google, Facebook, IKEA, Johnson & Johnson, General Motors, and others. The companies already have helped renewable energy markets considerably. In 2015, for example, U.S. corporate purchases of renewable energy (done mostly through long-term power purchase agreements) amounted to 3.2 gigawatts, or roughly equal to the amount of renewable energy that utilities purchased that same year.

Start with energy efficiency first.

Installing solar photo voltaic systems on-site, or using long-term purchase power agreements to buy energy generated through renewable sources, can provide economic benefits to these companies beyond helping their green business image. But adding renewables to a company’s energy management program makes more sense when coupled with a strong foundation in energy efficiency and strategic energy management.

For example, it would make no sense to install an expensive solar system on a house with no insulation, leaky windows, and incandescent lighting. Similarly, for a large facility or company seeking to reduce its carbon footprint, energy efficiency should clearly be the first priority:

On-site solar photo voltaic systems will significantly reduce electricity purchases, as do energy efficiency projects, but solar systems tend to have a longer payback period than energy efficiency projects.

Buying clean energy through purchase power agreements helps companies hedge against electricity price volatility, but each kilowatt-hour of electricity saved through energy efficiency reduces the cost of these contracts.

Strategic energy management (SEM) is a holistic, systematic approach towards improving a company’s (or facility’s) energy performance. The goal of SEM is to help the company achieve significant energy and cost savings, and the associated environmental benefits, over the long term. The key principles of SEM include setting long-term goals for energy savings, and putting in place systems to measure energy use and track progress towards these goals. SEM also involves developing and training an energy champion and energy team to identify and implement a series of projects, including capital projects as well as low-cost operation and maintenance measures. Utility energy efficiency programs support companies in these efforts, by providing incentives for equipment upgrades, to help more projects fall within the companies’ acceptable payback window. Some utilities also have programs to provide customers with training and coaching in SEM principles.

Leading Colorado Companies Building on SEM Principles

MillerCoors Brewery in Golden, Colorado reduced its energy consumption per barrel of beer by 27 percent from 2010 through 2015, through a variety of capital and low-cost measures. At the corporate level, MillerCoors set a goal to reduce its “value chain carbon footprint” per barrel of beer by 20 percent from 2010 to 2020. The Golden Brewery has strong management support for its long-term energy efficiency and greenhouse gas reduction goals, excellent systems in place to track energy performance, and a full-time energy manager and active energy teams that manage a steady list of efficiency projects. MillerCoors also participates actively in Xcel Energy’s incentive programs, including its “Process Efficiency” program, which provides incentives and assistance to companies to plan and implement energy efficiency projects over a two- to three-year period.

IBM Boulder has achieved annual energy savings averaging over 7 percent per year for the last 10 years through energy efficiency projects involving its facilities (HVAC and lighting) and information technology systems. Most of the energy savings have gone towards offsetting the increased consumption that would have accompanied the recent expansions to IBM Boulder’s operations.

At the corporate-level, IBM set a goal to purchase at least 20 percent renewable energy by 2020 and a goal to reduce its carbon dioxide emissions from energy consumption by 35 percent from 2005 to 2020. Towards this goal, IBM has already achieved a 15 percent reduction from 2005 to 2012. IBM Boulder is evaluating available options to procure solar- and wind-generated electricity to contribute toward achieving these corporate goals.

Like MillerCoors Brewery in Golden, IBM Boulder has developed and implemented all the key elements of SEM, and in addition has achieved ISO 50001 certification for its energy management systems. (The ISO certification formalizes IBM’s SEM elements and helps to ensure they will remain in place, even if key employees leave.) IBM also actively participates in Xcel Energy’s efficiency programs, including the Process Efficiency program.

Energy Efficiency Plus Clean Energy Equals a Better Bottom Line

Many large companies like MillerCoors and IBM are achieving significant energy cost savings and greenhouse gas reductions through energy efficiency. With a solid foundation in energy efficiency and SEM principles, companies are also broadening their horizons to take advantage of the benefits of on-site solar and renewable energy purchases.

Thinking strategically, leading companies will continue to improve their bottom lines and business image, while making significant contributions towards global clean energy and greenhouse gas emission reduction goals.

Neil Kolwey is Industrial Program Director at the Southwest Energy Efficiency Project, where he promotes best practices in utility energy efficiency programs for industrial customers and policies to support combined heat and power. Neil also manages the Colorado Industrial Energy Challenge, a voluntary program encouraging industrial facilities in Colorado to set 5-year energy efficiency goals.